As of the 1st of July 2017, a person who makes a purchase on an off the plan property will only be eligible to save on stamp duty should it be their principal place of residence or first home buyer purchases. The concession will no longer be applicable to any investors or commercial purchases.
Therefore, if you enter into a contract from July 1, 2017 – only property purchasers who intend to live in their property will be eligible for the following exemptions:
- A first home buyer entering into the market will have stamp duty exemptions up to a purchase price of $750,000
- A principle place of residence stamp duty concessions up to a dutiable value of $550,000
Example: A couple have decided to make an off the plan purchase of a brand new unit. The value of the land of this unit is $100,000 and the purchase price is $400,000. The construction has not yet commenced. The value of the land plus improvements at the date of the signing of the contract is $100,000 (this is the dutiable amount). As the couple have bought this property as their principle place of residence and it falls under the threshold, they are eligible for the off the plan stamp duty savings.
Vacant Residential Property Tax
The vacant residential property tax is an initiative directed at homeowners who keep their property vacant which effects our supply of occupiable properties on the market. This in turn puts pressure on increasing rents & prices.
This tax will mainly apply to inner and middle areas of Melbourne. These parts have been deemed the most pressing. The property tax will be calculated on a 1 percent tax on the improved value of the property. For example, if the taxable property has a capital improved value of $400,000, then the property owner will be taxed accordingly at 1% = $4,000. If you are unsure of what your capital improved value is, you can always check your rate notice. This will be measured on homeowner reporting the vacant property to the State Revenue Office. This does not come into effect until January 2018 & there are a number of consultations with the local Community that will happen beforehand. However, be very careful! Because, the State Revenue Office will be undertaking monitoring and compliance activities to ensure this is mandated properly.